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Recording Transactions in T - Accounts Preparing the Balance Sheet and Evaluating the Financial Leverage Ratio P2–3 Cash and cash equivalents

Reco ding ansactions in ccount eparing the Balance Sheet, and aluating the

Financial ev age Ratio (P2–3)

 

 

Cash and cash equ iv alents

$ 147,879

Other assets

$ 5,484

Short-term i estments

0

Accounts payable

78,722

Accounts rece iv able

14,602

Accrued xpenses payable

68,677

 

Ethan Allen Interiors, Inc., is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Ethan Allen’s June 30, 2007, annual financial report. Dollars are in thousands.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories

181,884

Long-term debt (includes the

 

Prepaid expenses and

 

current portion of $40)

202,908

other current assets

38,064

Other long-term liabilities

42,649

Property, plant, and equipment

322,185

Contributed capital

79,374

Intangibles

92,500

Retained earnings

330,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assume that the following events occurred in the first quarter ended September 30, 2007:

a. Issued additional shares of stock for $1,020 in cash. b. Purchased $3,400 in additional intangibles for cash. c. Sold equipment at its cost for $4,020 cash.

d. Ordered $43,500 in wood and other raw materials for the manufacturing plants.

e. Purchased property, plant, and equipment; paid $1,830 in cash and signed additional long-term notes for $9,400.

f. Sold at cost other assets for $310 cash.

g. Purchased $2,980 in short-term investments for cash.

h. Declared and paid $300 in dividends.

 

Required:

1. Create T-accounts for each of the accounts on the balance sheet; enter the balances at June 30,

2007.

2. Record each of the transactions for the first quarter ended September 30, 2007, in the T-accounts

(including referencing) and determine the ending balances.

3. Explain your response to event (d).

4. Prepare a classified balance sheet at September 30, 2007.

5. Compute the financial leverage ratio for the quarter ended September 30, 2007. What does this suggest about Ethan Allen Interiors, Inc.?

Jun 22 2020 View more View Less

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